More weird stuff from the labour market.
This chart from the OBR’s recent Economic and fiscal outlook shows how the wage distribution has shifted downwards over the last four years. Although, the number of people in work is higher than it was four years ago, there are now fewer people earning over £20,000 a year (at 2014 prices) than there were in 2010.
That’s really odd when you look at the growth in employment by occupational group over the same period.
The OBR chart is based on the Annual Survey of Hours and Earnings (ASHE), which is produced in April. If we take the March ONS figures on employment by occupation for 2010 and 2014, that gives us a comparison for the same period. (The aggregate increase is slightly different because the figures are from different surveys.)
The ONS has reclassified some jobs since I last looked at this, reducing the number in the high skill groups. Even so, around 60 percent of the increase in employment has been in the managerial, professional and associate professional groups.
Look at the two graphs side by side. Something funny is going on. We have more workers in the high skilled job categories but fewer earning over the equivalent of £20,000. This is yet more evidence of the downward slide in pay rates for high skilled jobs.
The numbers on both charts only cover employees. The picture would almost certainly look even worse if we had similar pay data for the self-employed.
Last week, I went to the UKCES Careers of the Future event. One of the speakers said that all the ‘Youth of Today stereotypes were wrong – apart from one: a lot of youngsters do tend to have unrealistic salary expectations.
This is probably nothing new. When I was at university in the 1980s, I met people who thought that getting a degree would make them rich. Gaining skills and qualifications has never been a route to riches though. However, it used to be a route to security, a reasonable degree of comfort and what we used to call solid respectability. Nowadays, I’m not sure it’s even that.
There are still good reasons for gaining skills and qualifications though. For those without them, the future looks pretty grim. Even with a high skill job, you might still end up with low pay and little security. Without skills and qualifications, though, you almost certainly will.